Saturday, January 31, 2009

Bernie Sanders: "Put Wall Street Under Oath"

The current economic crisis is often compared with the Great Depression, especially when it comes to making calls for rapid and sweeping responses to the mess that has been made by Wall Street bankers and speculators.

But what is not so frequently noted is that Franklin Roosevelt and his congressional allies did not merely act. They also investigated wrongdoing and pointed fingers of blame at the practices and practitioners that created the crisis.

The powerful Senate Banking and Currency Committee, prodded by its brilliant chief counsel, a New York prosecutor named Ferdinand Pecora, unearthed and revealed what the New York Times referred to as "a secret financial history of the 1920s, demystifying the assorted frauds, scams and abuses that culminated in the 1929 crash."

Roosevelt and the congressional leaders with whom he was aligned left no doubt that they thought Percora's eyes-wide-open examination--which actually began during the waning days of the failed presidency of Herbert Hoover, the man FDR swept from office--was an essential part of making a clean break with the thoughts and deeds that led to the collapse of the stock market, the shuttering of banks, factory closings, farm foreclosures and mass unemployment.

In his first inaugural address, Roosevelt indicted the bankers and speculators, declaring that:

Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

As the current crisis has unfolded, there has been plenty of action -- much of it misguided -- but little in the way of accountability.

This imbalance -- which FDR, Ferdinand Pecora and their allies so wisely recognized as dangerous folly -- may be changing, however.

Congress, having failed to establish a staisfactory system for monitoring the expenditure of last fall's $800 billion Wall Street bailout at a point when it might have been able to require a measure of responsibility on the part of the Treasury Department and the beneficiaries of its largesse, is now endeavoring to determine how the money is being spent.

That makes sense.

But a key senator is bluntly declaring that it would make even more sense -- at a point when allocated funds are being spent and more allocations are being requested -- to try and determine how the crisis was created.

That's what Vermont Senator Bernie Sanders, whose track record of demanding accountability stands him in stark contrast from most of his colleagues, is suggesting.

"We have an enormous responsibility to explain to the American people what led to this financial crisis, how did we get here, who is responsible, and what we can do to make sure that this never happens again," Sanders wrote in a letter sent Friday to Senate Majority Leader Harry Reid, D-Nevada. "In order to accomplish this very important goal. We need to examine what responsibility should be borne by individuals, corporations, and institutions for the poor decisions and foolish investments that have in large measure created this monumental crisis."

The Vermont Independent is proposing that the congressional oversight panel charged with examining the Troubled Asset Relief Program (TARP), which is chaired by Harvard University Law Professor Elizabeth Warren, should expand the scope of its investigation so that it can study the causes of the economic collapse.

"The TARP Oversight Panel is already in place," explains Sanders, the steadiest Senate critic of wasteful TARP spending and irresponsible bailout schemes. "A sensible next step would be to expand its charge from that of scrupulously examining how the TARP monies are spent, to also exploring why the financial crisis occurred in the first place. The panel should have subpoena power necessary to assure that it receives sound information and direct answers to the questions it is charged with answering."

Seventy-five years ago, in another time of economic turmoil, Ferdinand Pecora said he "put Wall Street under oath."

He did so with the backing of new president and a courageous Congress.

Bernie Sanders proposes to renew the investigation.

Barack Obama and Harry Reid should support Sanders and give Elizabeth Warren the charge and the authority to put Wall Street under oath once more.